Senator McLUCAS (Parliamentary Secretary to the Minister for Health and Ageing) (9:34 PM)
—On 26 April 2008 the excise and customs tariff proposals were published to increase the rate of excise and excise equivalent customs duty applying to other excisable beverages not exceeding 10 per cent by volume of alcohol from $39.36 to $66.67 per litre of alcohol content. The measure has resulted from government concerns at the growth in consumption of alcoholic beverages known as alcopops. As senators are aware, this measure reverses a serious mistake made by the Liberal and National parties in 2000. It is backed by research, it is backed by the health experts, it is backed by the evidence—and, can I say, it is backed by the community.

To ensure that products do not enter the market that undermine these changes, the bill will also alter the taxation definition of ‘beer’ in the Excise Tariff Act 1921 and ‘beer’ and ‘wine’ in the Customs Tariff Act 1995. Changes to the definition of wine in A New Tax System (Wine Equalisation Tax) Regulations 2000 will follow as part of these changes.

The increase in the rate applying to alcopops reflects the government’s concern at the growth in alcopops consumption, alongside their appeal to young and underage drinkers and the role that they play in encouraging binge drinking. Many of these drinks are colourful; they are sweet and sugary. They are designed to make the step between soft drinks and alcohol easy. They are L-plate cocktails. Many alcopops, particularly the white spirit based drinks, disguise the taste of alcohol with their sweet flavour. According to the National Drug and Alcohol Research Centre taste perceptions study they expose young and inexperienced drinkers to higher than normal risks because they are more likely to make false judgments about the product they are consuming. As Professor Tanya Chikritzhs said to the Senate inquiry last week:

… not all beverages are equal in the amount of harm they are likely to be associated with.

That is why the government is concerned about alcopops over other forms of alcohol and with fixing the loophole that was created by the Liberals back in 2000. The very nature of alcopops makes them more harmful to vulnerable young and underage drinkers, the very people who are targeted through the advertising on Facebook and magazines directed at young people and children. No-one who reads the newspaper or watches television can be unaware of the problems caused by binge drinking. Community leaders, police and health experts alike agree that action needs to be taken. In any given week approximately one in 10 12- to 17-year-olds are binge drinking or drinking at risky levels. Almost 20,000 girls aged 12 to 15 drink daily or weekly. The number of women aged 18 to 24 being admitted to hospitals because of alcohol has doubled in eight years.

Risky drinking is a common cause of violence. Almost 500,000 young people aged 14 to 19 years were physically abused in alcohol related incidents in 2007. In 2004-05, the social cost of alcohol misuse in Australia was estimated to be approximately $15.3 billion. For young people, RTDs are a big part of the binge drinking problem. Between 2000 and 2004, the percentage of female drinkers aged 15 to 17 who consumed alcopops at their last drinking occasion increased from 14 per cent to 62 per cent. For females drinking at high-risk levels in 2004, 78 per cent drank alcopops at their last drinking occasion. That figure had increased from 21 per cent in 2000.

Senator McLUCAS
—You might think it is funny, Senator. This is the data which your side say does not exist. The industry itself admits its sales have grown by 250 per cent since 2000. So the Rudd government has made the entirely sensible decision to reverse the Liberal Party’s mistake. The government’s decision leads to the logical situation that all spirits, whether bottled or premixed, are taxed at the same rate. As a result, the price of most alcopops has increased. Research shows that price increases can and will play an important role in tackling binge drinking and that higher prices lead to a reduction in consumption, particularly by young people and underage children.

This bill changes the definition of beer to set a combination of minimum limits on bitterness and maximum limits on sugar content that must be present in the final beverage. As part of the sugar requirements, artificial sweeteners will not be permitted to be added to beer. Apart from establishing new restrictions on the definition of beer, the government has also taken the opportunity to make changes that encourage innovation in the beer-making process. The changes will allow additional ingredients to be added during the brewing process, including small amounts of alcohol from a non-beer source. These changes are expected to allow domestic brewers to better compete with international brewers by providing opportunities to produce new beer flavours within the overall new limits concerning bitterness and sugar content.

The changes will only affect grape wine products and not other forms of wine. The category known as ‘grape wine products’ currently includes wine cocktails, flavoured wines and Irish style cream drinks, including wine creams. With a combination of flavourings or ingredients, a grape wine product could be produced to resemble a spirit based RTD product. The new definition will preclude the addition at any time of the flavour of an alcoholic beverage other than wine whether the flavour is natural or artificial and whether or not the flavour contains alcohol. For example, the addition of a rum flavour or a number of flavours that combine to produce a rum flavour would lead to the beverage no longer being classified as wine. Supporting this change, other changes to the definition will act to provide certainty as to the circumstances where alcohol can be added to a grape wine product—that is, alcohol other than grape spirit used in the preparation of the vegetable extract must not add more than one percentage point to the final alcohol strength by volume of the beverage. Without such a limit, additional amounts of alcohol could be added to a grape wine product potentially to provide a spirit flavour. These changes are not designed to have any significant impact on conventional beer and wine products. The government understands from consultations that both the beer and wine industries are supportive of the changes.

Subject to the support of the parliament, the new definitions of beer and wine will apply from 1 July. The 1 July 2009 start date has been chosen to provide sufficient time for industry to be informed of the changes and to make any adjustments. I acknowledge your question, Senator Birmingham. We will deal with that in the committee stage.

The Australian Taxation Office and Customs figures drawn from the first 10 months of this measure show that alcopops sales have dropped by 35 per cent compared to the previous year. This is significant. What is more, it is far beyond our modest predictions. When the measure was first introduced, modelling predicted that—

Senator Cormann
—You were predicting it would go up. You are misleading the Senate.

Senator McLUCAS
—Do you want to listen or not? When this measure was first introduced, modelling predicted that it would only slow the astronomical growth of alcopops sales, which would have been an achievement in itself. However, as we have heard, the ACNielsen figures—the figures accepted by all parts of the industry—demonstrate a reduction in the overall consumption of alcohol of 124 million standard drinks. That takes into account alcopops, straight spirits, beer and wine. And no-one on the other side is listening because that is the statistic they do not want to hear. They do not want to know that the overall reduction in consumption of alcohol has been by 124 million standard drinks. That is not a bad start. Let me expand on the ATO data. To quote from the Department of the Treasury’s submission to last week’s Senate inquiry:

The clearance data reveals a 34.6 per cent decrease in RTD consumption over the period May 2008 to January 2009, compared with the same period in the previous year. In contrast, solid growth was recorded for this period in each of the previous three years: 12.3 per cent in 2005-06, 8.2 per cent in 2006-07, 10.1 per cent in 2007-08.

So we had year of growth after year of growth for the preceding three years and then we have subsequently seen a reduction by 34.6 per cent.

Senator McLUCAS
—While the clearance data does show an increase in full-strength spirits consumption of 17 per cent—a figure that was quoted by Senator Fifield and Senator Colbeck—they omitted to quote the most important figure. Overall spirit consumption in RTDs combined with full-strength spirits has fallen around 7.9 per cent when compared to the same period in 2007-08. There has been a huge reduction in RTDs; there has been a small increase in straight spirits; but the most important figure is that overall consumption of spirits has reduced by 7.9 per cent—and you are saying the data does not exist.

Senator McLUCAS
—It hasn’t. Over the same period there was an increase—sorry—in beer consumption by 6.1 per cent. However, since the increase in the rate of excise of RTDs, the growth in excisable alcohol consumption of beer, spirits and RTDs has slowed. The ATO clearance figures show that the growth in excisable alcohol weakened by 0.1 per cent—

Senator McLUCAS
—in the period May 2008—keep listening—to January 2009 compared with the same period the year before. In contrast, solid growth was recorded for this period in each of the previous three years—very important figures coming up, Senator Fifield—6.6 per cent in 2005-06; two per cent in 2006-07; and 2.7 per cent in 2007-08. Once again, the figures support the position that the government is taking—this tax is working. The ATO said:

Excise clearance data does not include wine. Wine is not subject to excise duty, and similar volume data therefore is not available from the WET tax regime. However, it is noted that a recent article in the Medical Journal of Australia reported that the consumption of standard drinks in the form of wine in the period May to July 2008 fell by 2.6 per cent compared to the same period in 2007. This contributed to a fall in total standard drinks consumed in this period compared to the same period in 2007.

The Senate needs to remember that this is not the only thing that our government is doing to reduce binge drinking. Back in March last year we announced the National Binge Drinking Strategy, a strategy that has several parts. We are working with individuals through an early intervention program; we are working with local communities through the Good Sports program and through the community level initiatives; and we are talking to the whole community through the ‘Don’t turn a night out into a nightmare’ advertising campaign. But that is not all.

Senator McLUCAS
—That’s right—but wait: this is a comprehensive plan. We are also working with state and territory governments through the Ministerial Council on Drug Strategy on a range of measures that look more broadly at binge drinking: advertising, liquor licensing and secondary supply amongst them. Last week Minister Roxon announced $872 million of preventative health strategies—Senator Colbeck seems to have missed that happening. That is all aside from the work of the Preventative Health Taskforce, the task force that will be making its report and recommendations to the government in June this year.

The health sector is very pleased with the refocus of the government on that part of the alcohol and other drugs sector that causes the most harm to our community. We do have a comprehensive plan in order to change the culture, as Senator Fielding said and I think Senator Birmingham said. We do need to change the culture around inappropriate use of alcohol in this country, and our government is trying to do something about it. By contrast, the previous government did not engage at all in trying to deal with inappropriate use of alcohol. We are now dealing with the results of that inaction.

The alcopops measure will raise $1.6 billion from 27 April 2008 over the forward estimates—somewhat less than the original estimate at the time of the last budget but a clear indication that the measure is working. There is a lot of debate about which figures mean the most and whether there is a clear indication that the measure is working, but can I say that public health measures do take some time to demonstrate effect. We did not put up the tax on cigarettes and have a 10 per cent decrease in smoking overnight. The health experts have all recognised this fact, a fact somewhat missed by those people during the Senate inquiry. Professor Chikritzhs of the National Drug Research Institute recognised that there was no quantifiable evidence at this stage but said—and this is very important:

… various surveys, such as the secondary schools survey and the National Drugs Strategy health survey, [identify] which part of the population prefers to drink RTDs, or alcopops. We know that in the 14- to 17-year-old age group who drinks at risky, high-risk levels for short-term harm, 70 to 80 per cent of that consumption is done via RTDs, or alcopops … We could make an educated guess—

and can I say this is a very educated woman, saying that young people drinking at risky levels—

would be the most likely to be affected by this RTD tax.

We know that it is young people who are drinking large amounts of them. We also know that young people, but particularly underage drinkers, are extremely price sensitive. Professor Chikritzhs gets it. It is astonishing that those on the other side do not.

The coalition senators are therefore saying that the do-nothing approach is the way to go. For the 15- to 17-year-old girls, of which 62 per cent are now drinking alcopops compared to 14 per cent in 2000, that is not good enough for me. For having twice as many young women presenting at hospitals than eight years ago, doing nothing is not good enough for me. And for Senator Birmingham to say that this is a question of choice is not good enough for me because I do not have a choice as a taxpayer to pick up the bill for the health costs for inappropriate use of alcohol, and neither do I have a choice to pick up the bill for the harm and the effects on policing that all our states and territories are now dealing with.

I am amazed that any senator could not vote for this bill. The government’s action on alcopops is working. It may not be working for the distillers or their representatives in this place, the Liberal and National parties, but it is working. The AMA, the Public Health Association of Australia, the Alcohol and Other Drugs Council of Australia, the Royal Australasian College of Physicians, the Australian National Council on Drugs, as well as the experts commissioned by the Howard government, all backed this measure. And so do the Australian public. The Australian Cancer Council surveyed Australians earlier this year, finding 57 per cent support the tax irrespective of where the money goes, but that moves to 84 per cent if the money is being used on public health measures.

This is a strong piece of legislation, it is backed by research, it is backed by the health experts, it is backed by the evidence and, most importantly, it is backed by the community. It will enable us to make significant investments in prevention and in tackling alcohol abuse and, therefore, should be supported.